May 12, 1999    
This Date's Issues: 3281 • 3282   • 

Johnson's Russia List
#3282
12 May 1999
davidjohnson@erols.com

[Note from David Johnson:
I came home from work early to do this. I'm eagerly looking forward
to tomorrow's newspapers to see how the Washington Post and New York
Times handle Stepashin's Chechnya connection. 
I am going up to Massachusetts on Friday for my mother's memorial
service, and for fishing. Anyone in the area is welcome to attend and to see 
the classic New England small town. I hope to keep JRL going.:
>From Athol Daily News
PETERSHAM — A memorial service will be held, in the manner of Friends,
Saturday, 
May 15 at 3 p.m. in the First Congregational Unitarian Church, Petersham to 
celebrate the life of Irene R. Johnson, who died Jan. 18, 1999. She was the 
wife of Russell Johnson. 

1. Reuters: Chubais tells of recent role advising Yeltsin. 

2. Reuters: Excerpts from Yeltsin's TV address.
3. AP: Text of Yeltsin Statement.
4. Reuters: U.S. expects Russia will stay on reform path. 
5. Reuters: Rules of presidential impeachment in Russia.
6. Reuters: Yeltsin impeachment agenda in Russian Duma.
7. AP: Russians Regret Primakov Dismissal.
8. AFP: Russians on the street fear chaos after Primakov sacking.
9. Journal of Commerce: John Helmer, YELTSIN'S PROSPECTS, AMERICA'S 
STAKES.
10. Tom De-Waal: Sergei Stepashin.
11. Fred Weir on the sacking.
12. Reuters: ANALYSIS-Yeltsin deals blow to Russia economy, IMF.
13. Reuters: ANALYSIS-Yeltsin raises Kosovo, instability risks.
14. Reuters: Russia investment bets off after sacking -analysts.] 

*******

#1
Chubais tells of recent role advising Yeltsin
By Adam Tanner

MOSCOW, May 12 (Reuters) - Anatoly Chubais, Russia's best- known market 
reformer, hinted that he had a role in advising Russian President Boris 
Yeltsin to sack Prime Minister Yevgeny Primakov and replace him with Sergei 
Stepashin on Wednesday. 

``In the last three weeks I have talked to the president several times and 
once in person,'' Chubais told reporters. ``We discussed various political 
issues.'' 

Chubais, father of Russia's controversial privatisation programme and a 
former first deputy prime minister, also said Yeltsin, 68, was getting back 
into form after illnesses that have plagued much of his second term in 
office. 

``As I see it, he is on one of his best forms in recent months or even the 
past year,'' said Chubais, a former close adviser who served as Yeltsin's 
chief of staff in 1996 and 1997. 

Yeltsin abruptly dismissed Primakov on Wednesday a day ahead of the scheduled 
start of a parliamentary impeachment debate against the president. 

His halting speech announcing the replacement and recent quirky actions have 
raised some questions about Yeltsin's focus, but Chubais said Yeltsin was on 
an upswing. 

``He has the following characteristic Western readers may not fully 
understand,'' he said. ``Just as the political situation gets tough, goes 
bad, grows more complicated, when the call comes the president mobilises his 
internal resources and turns out in his best form.'' 

``It's true that reverse periods also happen when everything is quiet and 
calm and the president's reaction is not as intensive,'' he added. 

Chubais declined to say directly whether he and Yeltsin had discussed 
replacing the government but he seemed well aware of events leading up to 
Primakov's dismissal. 

``I know it was not a spontaneous decision, but a detailed, well-thought out 
process not of just one or two days but of a much longer period,'' Chubais 
said. 

Now head of Russia's national electricity company UES, Chubais praised 
Stepashin, 47, who until now had been a first deputy prime minister and 
interior minister. 

``Stepashin is a St Petersburg intellectual, a doctor of law, a highly 
educated and cultured person, very rare qualities,'' he said. ``He has acted 
very bravely in very difficult situations when his own life was at stake.'' 

A fellow native of St Petersburg, Chubais has himself often promoted 
officials from Russia's second city. 

Chubais said he had no offers and no intention to serve in the latest 
government -- the fourth in little more than a year -- but said other 
political allies might play a role -- a reference to Russia's other so-called 
``young reformers.'' 

He also criticised Primakov, 69, for failing to get the economy moving in 
recent months. 

*******

#2
Excerpts from Yeltsin's TV address

MOSCOW, May 12 (Reuters) - Following is a Reuters translation of excerpts 
from Russian President Boris Yeltsin's televised address following his 
decision on Wednesday to sack Prime Minister Yevgeny Primakov's government. 

Dear Russians. Today I have taken a difficult decision. I have fired the 
government. 

Yevgeny Maksimovich Primakov came (to power) at a very difficult time, a 
period of severe crisis in the country. His appointment was backed by all 
political forces. He succeeded in halting the crisis in the economic and 
social spheres. But the gradual evaluation of the work of the government has 
changed. Its activities became linked exclusively to political stabilisation. 
But today the situation is once again far from stability, in the economy and 
in politics. 

Yes, the credit of confidence in the government of Primakov is great, as it 
was before. But that is mainly due to the personal qualities of the premier. 
Even in the most difficult situations, he always demonstrates admirable 
patience, composure, calm of mind. Yet social difficulties in the regions are 
growing. Criticism of the government is increasing in strength from all 
directions. The government gives the appearance that all is all right. In 
fact, it is the reverse. 

Today (liberal politician Grigory) Yavlinsky, who backed Primakov from the 
outset, says 'In the realm of the economy there is absolute stagnation. 
Nothing is being done.' 

What has happened? The government has completely fulfilled the tactical task 
facing it. But in economics we are, as before, treading water. 

One has the feeling that the government's activity on the economy came down 
simply to negotiations with the International Monetary Fund, as if curing 
Russia's economy depended solely on the handing out of Western loans. The 
situation as a whole can be characterised as follows: there is no basis for 
serious and stable economic growth. It is painful to speak of this, as the 
August crisis has become a cause for the sharp fall in the quality of life 
for people. The economic crisis will not vanish by itself. Therefore the 
government must act. 

Yevgeny Maksimovich could not carry out sharp movements, and fully displayed 
his highest art of diplomacy: caution and carefulness. I respect him for not 
falling under the influence of radicals from either the right or the left. 
But today the situation is different. The premier's caution, his readiness to 
take only those steps that receive maximum goodwill and support now works as 
a handicap. 

On the eve of elections, few people can be found who are willing to support 
unpopular and severe decisions in the economy. We do not need 'stabilisation 
of poverty and economic decline'. We must have a serious break. 

Russia has hundreds of thousands of ambitious, energetic people. In the 
regions there are well-informed leaders. We can count on them to pull our 
economy up. 

The time for calming conversations has passed. The time is long overdue for 
energetic activity. We cannot postpone necessary decisions until after the 
election campaigns. We must not hesitate to carry them out if these decisions 
are in fact necessary to escape the crisis. 

I want to say once more to Yevgeny Maksimovich (Primakov) the most sincere 
words of thanks for all he has done and of course, first and foremost, for 
the courage he demonstrated in agreeing to head the government in such a 
troubled situation. 

I have named as acting premier Sergei Vadimovich Stepashin and have submitted 
his candidacy for confirmation to the State Duma. This is a candidacy that is 
supported by Yevgeny Maksimovich (Primakov). 

Sergei Vadimovich Stepashin has demonstrated great energy and capability for 
work. He has serious experience leading federal organs. I am certain that he 
can give the government an additional impulse, the necessary dynamic. 

I thank you for your attention.'' 

******

#3
Text of Yeltsin Statement
May 12, 1999
By The Associated Press

Russian President Boris Yeltsin's statement explaining his dismissal of Prime 
Minister Yevgeny Primakov:

Today I made a difficult decision -- dismissed Prime Minister Yevgeny 
Maksimovich Primakov from his post.

Yevgeny Maksimovich arrived at a very difficult moment -- a period of a harsh 
crisis in the country. Primakov's appointment was supported by all political 
forces. To his name people connect the stabilization of the situation in the 
economy and the social sphere. I want to express the warmest and most sincere 
words of gratitude to him for all he has done. And, above all, for the 
valiance he demonstrated by agreeing to head the government in this difficult 
situation.

True, the government has fully carried out its tactical task. But the 
situation in the economy still isn't improving. The question of the economic 
strategy, today, nine months later, still remains open.

We have no right to put off making decisions that are necessary for the 
revival of the economy for another six months -- until the end of the 
election campaign. Delays and procrastination, I am sure, are the most 
serious blow today to stability in the economy and the social sphere. It is 
the greatest danger on the eve of decisive elections to the State Duma.

Sergei Vadimovich Stepashin was appointed acting prime minister. His 
candidacy is supported by Yevgeny Maksimovich Primakov. He is well known for 
his successful work in the government, in law enforcement bodies, for his 
active work in Russia's `hot spots.'

The candidacy of Sergei Vadimovich Stepashin is presented for review by the 
State Duma.

I am sure that the new premier is capable of putting the required dynamism 
and energy into the Cabinet's work.

******

#4
U.S. expects Russia will stay on reform path

WASHINGTON, May 12 (Reuters) - The White House on Wednesday said it expected 
Russia to stay on the path of economic reform despite Russian President Boris 
Yeltsin's firing of Prime Minister Yevgeny Primakov. 

White House spokesman Joe Lockhart called Primakov's firing an "internal 
political matter for Russia." 

"We expect that Russia will continue on the path of economic reform and move 
forward with the efforts that have been ongoing there now for some time," 
Lockhart told reporters. 

He also said the United States believed Russia would continue to play a 
"constructive role" in trying to find a peaceful settlement in Yugoslavia. 

U.S.-Russian relations have been tense in recent weeks over Moscow's 
opposition to the NATO air war trying to dislodge Serb forces from Kosovo. 

The International Monetary Fund agreed in late April to lend Russia $4.5 
billion over 18 months. Asked if Washington still supported the package, 
Lockhart said: "What's important there is not the political players, but what 
they do as a far as moving towards economic reform, reform of the banking 
system, collection of taxes...that's what's important and that's what we'll 
continue to focus on." 

*******

#5
Rules of presidential impeachment in Russia

MOSCOW, May 12 (Reuters) - Russia's State Duma lower house of parliament will 
take up a Communist-proposed impeachment bid against President Boris Yeltsin 
on May 13-15. 

The post-Soviet constitution, adopted in December 1993, makes impeachment - a 
complex, multi-stage procedure - unlikely, but the president's shock sacking 
of Prime Minister Yevgeny Primakov's government on Wednesday has hardened 
many deputies against Yeltsin. 

Following are the rules of impeachment under Russia's constitution. 

The support of two-thirds of deputies in the Duma is needed to launch 
impeachment proceedings. 

Last month the Duma approved a series of amendments, aimed at simplifying the 
procedure at least in the lower house. 

The parliament can now hold an open vote using personal ballots, which makes 
it difficult for rogue deputies to break party ranks and is likely to boost 
the impeachment chances. The previous regulation allowed only a secret vote 
on impeachment. 

The chamber can now also vote on each impeachment count individually. In 
Yeltsin's case, this means that deputies will vote on five separate charges 
and will start impeachment proceedings even if only one of them is approved. 

The president cannot dissolve the Duma after the start of the impeachment 
process. However this has been complicated by Yeltsin's decision to sack 
Primakov. If the Duma rejects his candidate to replace Primakov three times, 
the president must dissolve the chamber and call a new parliamentary 
election. 

The constitution is vague on what would happen in this case. Yeltsin might 
seek a way out of the deadlock by asking the Constitutional Court to rule on 
who has sway, suspending the Duma during that time and appointing a prime 
minister anyway. 

If two-thirds of the 450-strong Duma approve one or more of the impeachment 
charges, the chamber sends them within five days to the Supreme Court to 
examine them and to the Constitutional Court to confirm that the procedure 
has not been violated. 

If both courts give a positive ruling, the accusations go to the Federation 
Council upper house for approval.The Federation Council, where powerful 
regional bosses sit, is usually loyal to the Kremlin and is less likely to 
back impeachment. 

If two thirds of the Federation Council fail to support the bill or if the 
chamber fails to review it three months after it has been approved by the 
Duma, impeachment is deemed to have failed. 

If impeachment is approved, the president must quit his post and the prime 
minister takes temporary control of Russia. The prime minister cannot disband 
parliament, call referendums or amend the constitution. A new presidential 
election must be held within three months of the date of the president's 
removal. 

*******

#6
Yeltsin impeachment agenda in Russian Duma

MOSCOW, May 12 (Reuters) - Russia's State Duma lower house of parliament will 
start impeachment debates against President Boris Yeltsin on Thursday. 

Following is a tentative schedule of the debates, which deputies expect to 
run for three days. They said they would sit for 10 hours a day, two hours 
longer than usual, on those three days. Times first in local and then GMT are 
approximate as crucial debates normally take longer than scheduled): 
THURSDAY, MAY 13 

1000/0600 - The chamber opens its session. Vadim Filimonov, Communist head of 
the Duma's special commission on impeachment charges, takes the floor for one 
and a half hours. 

1130/0730 - Viktor Ilyukhin, Communist head of the Duma's security committee, 
has one and a half hours to make the case for the prosecution. 

Around 1200/0800-1230/0830 - break (may be moved) 

Around 1330/0930 - A presidential representative (most likely Alexander 
Kotenkov, who is Yeltsin's permanent representative in the Duma) takes the 
floor for another one and a half hours to give the case for the defence. 

Around 1400/1000-1600/1200 - lunch break (may be moved or shortened). 

Around 1600/1200 - Impeachment commission members have 10 minutes each to 
formulate their position. 

Questions from the deputies to follow -- four questions from each political 
faction and three from each group of deputies. Some deputies have said the 
chamber is unlikely to be able to do more on the first day. 

FRIDAY, May 14 

1000/0600 - The session starts with debates on the impeachment charges. Each 
political faction is allowed to have four speakers, three from each group of 
deputies -- about 25 people. Duration not specified. 

Experts from factions and groups take the floor for approximately one hour 
and 45 minutes. 

Deputies can ask them questions afterwards. 

Commission head Filimonov, Ilyukhin and Kotenkov have half an hour for 
last-minute additions. 

Faction leaders take the stage for 15 minutes each. 

SATURDAY, May 15 (if not earlier) 

The session starts at 1000/0600. 

Deputies vote on whether to hold an open or secret ballot. 

If the ballot is open (likely) deputies receive five personal ballots each 
for every count against Yeltsin individually and in strict accordance with 
their documents. 

They fill in the different-coloured ballots. 

Communist leader Gennady Zyuganov has said the results are likely to become 
known in the second half of Saturday. 

If at least one charge wins 300 votes in the 450-seat Duma, the chamber has 
five days to submit the approved charge or charges to the Supreme Court to 
examine them and to the Constitutional Court to confirm that the procedure 
has not been violated. 

After this procedure the charges can be submitted to the Federation Council 
upper house for approval. 

*******

#7
Russians Regret Primakov Dismissal
May 12, 1999
By ANNA DOLGOV

MOSCOW (AP) -- In a nation of skeptics toughened by an endless succession of 
crises and governments, the dismissal today of the latest prime minister 
seemed to cause regret and apprehension -- but little fear of major upheaval.

Russia has seen three prime ministers and Cabinets dismissed in little more 
than a year. But the latest premier to get President Boris Yeltsin's boot, 
Yevgeny Primakov, was widely admired and trusted by Russians, far more than 
his predecessors.

``He shouldn't have been dismissed,'' said Gennady Simonov, an attendant at a 
parking lot in central Moscow. ``He was trying to do something, after all.''

``Yeltsin is the one who should have get fired, but what has (Primakov) done 
to deserve that?''

Yeltsin said Primakov was dismissed for failing to rescue the foundering 
Russian economy. Few people believed the explanation, and the consensus among 
political observers was that Yeltsin was using Primakov to strike out at 
parliament before it began impeachment hearings scheduled for Thursday.

Lawmakers, who enjoy good ties with Primakov, warned that his dismissal would 
turn many parliament deputies against the president and increase chances for 
impeachment.

The prediction seemed indisputable to many Russians.

Firing Primakov ``wasn't a very good idea'' on Yeltsin's part, said wrestling 
trainer Vitaly Salnikov, approached on a street in central Moscow.

He rejected suggestions that the standoff between Yeltsin and the Communist 
opposition could escalate into street riots and the deployment of tanks and 
troops, as it did in 1993.

``There will be a crisis ... but there won't be any tanks,'' Salnikov said.

Others seemed more wary.

``I think there will be trouble. I feel uneasy,'' said Antonina Petrova, a 
retired Soviet government worker and a Communist sympathizer who has always 
voted against Yeltsin.

Pensioners and other poorer Russians also worried about being hit by the 
usual fallout of Russia's political troubles -- sharp price hikes and soaring 
inflation.

``The dollar rate will go up again, the prices will grow and all that sort of 
thing,'' pensioner Vyacheslav Frauchi said with a sigh.

Yeltsin has a history of abruptly firing aides and government ministers. Few 
people are surprised by his erratic behavior anymore, but many seem tired of 
it.

``It's time for him to take a rest. He's old,'' Frauchi said.

Yeltsin's approval ratings have sunk into the low single digits, and despite 
his occasional bursts of activity, many Russians no longer think their 
president can control the situation.

``I sympathize with Primakov,'' Salnikov said.

And Yeltsin? ``I don't think anything of Yeltsin,'' he said.

******

#8
Russians on the street fear chaos after Primakov sacking

MOSCOW, May 12 (AFP) - Russians braced themselves for anything from another 
economic crisis to war as they faced yet another political crisis following 
the well-liked premier Yevgeny Primakov's ouster on Wednesday.

Yet while some Russians on Moscow's streets put forth dire predictions for 
Russia's future, plenty also grumbled that they have been through all this 
many times before.

"The ministerial leap-frog has begun," said one of the Muscovites who was 
going about his everyday business in the nation's capital while political 
crises raged inside Kremlin walls.

Just as a May snowfall makes Russians shrug -- and they were shrugging at the 
sky on Wednesday -- so do political shake-ups.

"They do anything in the Kremlin! Yeltsin is completely crazy," said 
Stanislav Orlov, a young businessman.

Pensioner Alevtina Giorgeva blamed the political shake-up on "the intrigues 
of (tycoon Boris) Berezovsky," Primakov's leading rival who is known as a 
Kremlin eminence grise.

"This is not surprising to me at all. I remember quite well the sackings of 
(Viktor) Chernomyrdin and (Sergei) Kirienko," said a 23-year-old student, 
Yulia Petrovna.

Primakov is the third prime minister to be sacked by President Boris Yeltsin 
in just under 14 months.

"This also needed to happen with Primakov, but the consequences of this 
sacking are unpredictable," Petrovna warned.

However, other Muscovites were quick to predict that Primakov's demise would 
lead to political chaos, or worse.

"From now on, a person cannot be sure of anything. Anything can happen, even 
war," said Anna Timofeyeva, 50, a doctor.

Many said they still supported Primakov, who during his tenure topped the 
unpopular Yeltsin and other leaders in most opinion polls.

"I am against the sacking," said 65-year-old pensioner Alla Tikhonova. 
"Primakov was an honest, cultured man and he perfectly understood 
international affairs, but Yeltsin will not let a person work.

"The situation in the country was already quite unstable before this 
dismissal. Why aggravate it further?" she demanded.

Tatiana Petrova, a 34-year-old lawyer, saw Russia's future in even more 
dismal terms, saying the situation "is close to catastrophe.

"Only Primakov was capable of more or less maintaining stability," she added.

Some also expected Primakov's sacking to lead the country into further 
economic hard times.

"The consequences of the sacking on the economy, which has already been 
reduced to nothing after the August 17 financial crisis, can still be very 
negative and the ruble can still fall," warned Taissiya Ivanovna, 53, an 
economist.

"There's going to be a new economic crisis and still more inflation," said 
Vasily Adriukov, 20, who was busy loading cargo onto waiting trucks.

Pyotr Yonovich, a company director, said that economic activity would "stop 
for a certain amount of time due to the (political) instability."

Lena and Natasha, who sell flowers, took the sackings with a pinch of salt.

Looking up at the lightly falling snowflakes, one of them said, "for us, the 
weather on the streets is more important." 

******

#9
Date: Wed, 12 May 1999
From: helmer@glasnet.ru (John Helmer) 
Subject: YELTSIN'S PROSPECTS, AMERICA'S STAKES

BY JOHN HELMER
JOURNAL OF COMMERCE, to come 
YELTSIN'S PROSPECTS, AMERICA'S STAKES
Moscow. Not long ago, at a luncheon meeting of North American
businessmen in Moscow, the question was asked: Does anyone believe
their business would be better off if Prime Minister Yevgeny Primakov
was sacked? 
The answer was unanimous. Mr. Primakov was viewed as the most stable,
and also the most honest, candidate for leadership of Russia today.
Now that he has been dismissed by President Boris Yeltsin, most American
businessmen believe the instability that will follow, and the lack
of commitment to rooting out corruption, are going to be bad for their
business. 
The international money markets have already acknowledged this by cutting 
the price of Russian debt, and raising the premium for Russian risk. Trade 
finance for exports to Russia will be harder to raise; insurance premiums
for Russia-bound cargoes will be costlier. Rising dollar prices will translate
into higher rouble charges, and falling Russian demand.
The importance of the corruption issue cannot be under-estimated.
Mr. Primakov steadily gained in national popularity over months in
which, in any other country, the combination of rising inflation,
falling wages, and growing unemployment and poverty, would have
generated mass discontent. Instead, he became the most trusted 
politician in Russia, and the one candidate the polls showed could
win the presidential election in the first round. Call this the
honesty effect.
The new nominee for prime minister, Sergei Stepashin, has served for
years as Justice Minister, as chief of the Federal Security Service 
(formerly KGB), and as the Interior Minister in charge of crime-fighting.
Those years prove what he can do to clean up corruption. Call this the do-
nothing effect.
Mr. Yeltsin's announcement Wednesday also promoted as First Deputy Prime
Minister the Railways Minister, Nikolai Aksenenko, a man of such obscurity 
and political insignificance that he could not possibly threaten the 
president, or disobey him. A figure who has slowly ascended the St.Petersburg
railways hierarchy -- with connexions to the Yeltsin family financier Boris 
Berezovsky, and campaign manager Anatoly Chubais -- Mr. Aksenenko is so 
cautious, he doesn't even have a personal opinion on whether Russia's rail 
cargo rates should rise or fall.
Confronted on the point by regional governors a few days ago, Mr.Aksenenko 
promised to do nothing for at least three months.
That's a promise which the policy of the Russian government can be 
expected to deliver, now that Mr. Primakov has fallen.
The political outcome of the turmoil will be to reduce Mr. Yeltsin's
rating in Russia from 7% to zero. It will galvanize the Russian opposition,
pitching Moscow Mayor Yury Luzhkov to the pole position in the race for the 
presidential succession.
New politicians, like Samara governor Konstantin Titov, will start visibly
running for the presidency. He turned down the offer of the First Deputy 
Prime Minister's post last week, to give himself room for a more ambitious
campaign.
Behind Mr. Aksenenko, it is certain that former deputy prime minister
Chubais, and ex-prime minister Yegor Gaidar, will resume the policymaking
role they had, when the rouble crashed last August. It was they who advised
the Russian government to default on its bonds. It was their action that
triggered the stripping of assets by Russia's leading commercial bankers,
the bankruptcy of the banks, and the collapse of Russia's import trade.
They are bound to appeal to the Clinton Administration for a quick show of 
confidence in the new regime. Under Secretary of State Strobe Talbott
chanced to be in Moscow when the government fell, and he may be sympathetic.
But Mr. Talbott doesn't export on credit, and he isn't in the money-lending 
business. It will be remarkable indeed if there is a banker alive on Wall 
Street, who would endorse fresh funding for Mr. Chubais's favored 
institutions, after what he did to inflict billion-dollar losses on western 
lenders nine months ago.
If Mr. Chubais offers to secure new loans by having the Kremlin issue
a series of tax and privatization decrees -- bypassing the legislature -- 
western leaders are likely to remind Mr. Chubais that if he could not be 
trusted to honor legally authorized obligations last year, he can hardly 
expect illegal measures now to generate either enthusiasm or cash.

******

#10
Date: Wed, 12 May 1999 
From: Tom De-Waal <tom.dewaal@bbc.co.uk>
Subject: Sergei Stepashin

Dear David,

Since his name seems bound to come up a lot in the near future may I make a
pre-emptive contribution about Sergei Stepashin? Although I am no great fan
of his -- and I think my stand against the war on Chechnya is well-known --,
it seems that he is already acquiring the tag "hardliner" and "hawk" in the
same rather thoughtless way that Primakov became a "former spymaster." I
think in the interests of fairness this should be discouraged.

Stepashin's record on law and order, security and Chechnya is mixed but by
no means all black: 

1. As chairman of the Security Committee in the Supreme Soviet he headed the
investigation into the KGB after August 1991 and called for reform of its
successors. When he was brought in as deputy to Nikolai Golushko of the FSK
in September 1993 and then made head in March 1994, there were high hopes
that he would shake things up. This he singally failed to do, although he
was a slight improvement on Golushko and Barannikov in appointing non-career
KGB people to the FSK/FSB.

2. He was one of the patrons of the strategy of arming the Chechen
opposition in 1994. In November 1994 he supported the plan to send in the
armed forces. A big black mark on his name. However it should be said that
once the war started he was less associated with the "party of war"
(Grachev, Soskovets, Yegorov etc). Sergei Yushenkov said that Stepashin was
the only government member who picked up the phone to him, when he was
trying to go to Grozny to negotiate with Dudayev. Stepashin's role was again
more as linkman with the Chechen opposition and he performed actions such as
flying in to the opposition-dominated village, Urus-Martan to apologize when
a bomb hit them. When Carlotta Gall and I were researching our book on
Chechnya he was the only man associated with the Chechen debacle to agree to
an interview (he also gave one to Sonia Mikich of German public television
ARD) in which he said that the whole decision to intervene had been a big
mistake, it had been triggered by poor intelligence for which he was
responsible and he deeply regretted the whole thing. Crocodile tears maybe
-- but a lot more than Grachev, Soskovets, Yegorov, Korzhakov, Kotenkov etc
ever bothered to say on the record.

3. As Justice Minister he took over the prison system from the Interior
Ministry, and expressed the hope that it would start to meet Council of
Europe recommendations on overcrowding and conditions.

4. Galina Starovoitova's family have said they were impressed by the
personal interest he took in the case and how he contacted them personally
to promise it would be solved. (The evidence of course suggests nothing has
happened. Is this due to his feebleness or the difficulty of the case? It's
hard to judge)

5. As Interior Minister he again took an interest in Chechnya. Again the
record is mixed. On the one hand a tough line over the kidnapping of
General Gennady Shpigun, threatening retaliation. On the other, according to
those who worked on the hostage issues, he was virtually the only top
government official who took an interest in the fate of hostages and offered
the Chechen government a lot of information and technical assistance.

I think the above suggests that Stepashin is certainly no liberal, but nor
is he a hawk. He is more in the Chernomyrdin mould: a Yeltsin loyalist and
pragmatist with a certain talent for public relations, who can be relied
upon to "fluctuate with the party line." This of course unfortunately makes
him awkward to categorize for journalists in a hurry.

******

#11
Date: Wed, 12 May 1999 
From: "Fred Weir" <fweir@glas.apc.org> 
For the Hindustan Times
From: Fred Weir in Moscow

MOSCOW (HT May 12) -- True to his reputation as dangerous and
unpredictable when threatened, President Boris Yeltsin overturned Russia's
political chessboard Wednesday by suddenly firing Prime Minister Yevgeny
Primakov.
Mr. Primakov, brought in against Mr. Yeltsin's wishes last September
to restore stability amid financial crash and political turmoil, had
apparently angered the Kremlin with his close ties to the opposition-led
State Duma, his solid public popularity and a style that looked
increasingly presidential.
Although it had been widely rumoured, the sacking stunned the country
and stirred up a hornet's nest of fury in the Duma, which was just about to
begin a debate on impeaching Mr. Yeltsin for high treason and other grave
crimes.
"Today I made a difficult decision: I dismissed Prime Minister Yevgeny
Maximovich Primakov from his post," Mr. Yeltsin said in an official
statement.
He expressed gratitude to Mr. Primakov for his work and said the Prime
Minister had successfully carried out his "tactical task" of stabilizing the
economy and society following last autumn's economic crisis.
"But the situation in the economy still isn't improving. The question
of the economic strategy today, nine months later, remains open," Mr.
Yeltsin said.
Without key economic changes now, he said, nothing will be done until
after the parliamentary elections scheduled for next December. "Delays and
procrastination, I am sure, are the most serious blow today to stability in
the economy and the social sphere," Mr. Yeltsin said.
Long-time Yeltsin loyalist Sergei Stepashin, head of Russia's police
forces and recently appointed first deputy prime minister, is to take over
as acting head of government. "I am sure that the new premier is capable of
putting the required dynamism and energy into the Cabinet's work," Mr.
Yeltsin said.
According to Russian TV, Mr. Yeltsin immediately sent a letter to the
Duma nominating Mr. Stepashin as Russia's next Prime Minister. The
parliament now has two weeks to vote on the appointment. If it turns down
the Kremlin's nominee three times, Mr. Yeltsin has the constitutional right
to dissolve the Duma and rule by decree until fresh elections.
"Yeltsin decided to outflank all his enemies and blow up a sharp
confrontation, which is the only situation where he feels comfortable," says
Valery Fyodorov, director of the Centre for Political Trends in Moscow.
"The Kremlin's honeymoon with Primakov ended long ago. Yeltsin has
been looking for ways to get rid of him for some time. But firing Primakov
like this is a very adventurous move, and is fraught with danger. Primakov
was the Duma's darling, and parliament is going to explode over this. There
is no chance they will accept any new Prime Minister that Yeltsin puts
before them".
Analysts warn that Mr. Yeltsin has started a firestorm that could last
for months and unhinge the entire political system.
"This will lead to major crisis," says Andranik Migranyan, director of
the independent Reform Foundation in Moscow. "The battle lines are drawn
between Yeltsin and the Duma, and could result in dissolution of parliament
and Kremlin rule by decree. Things will definitely not be quiet now".
Last year Mr. Yeltsin fired two prime ministers, which roiled Russia's
political waters so badly that in September the Duma refused to accept the
President's nominee, Viktor Chernomyrdin, and only calmed down when Mr.
Primakov's name was put before parliament.
Some analysts believe Mr. Yeltsin's sacking of Mr. Primakov may have
been a pre-emptive strike against parliamentary opponents seeking to remove
the President. On Thursday the Duma is slated to open debate on impeaching
him on five counts of treason and high crimes against the Russian people.
The impeachment case has been in preparation for almost a year, but the
Duma decided Tuesday to go ahead with it this week.
The five charges against Mr. Yeltsin involve his role in illegally
> dissolving the Soviet Union; the violent dissolution of parliament in
October 1993; the bloody two-year war in Chechnya; the disintegration of
Russia's military forces and market reforms that led to "genocide" of the
Russian people.
Only one of the articles, Mr. Yeltsin's responsibility for the
conflict in Chechnya, is considered likely to gain the two-thirds majority
it requires to pass the Duma.
Under Russia's Yeltsin-authored Constitution, impeachment is a complex
and nigh-impossible process. If the Duma votes for it, the case must then be
examined by the Supreme Court and the Constitutional Court, and finally must
win a two-thirds vote in the Federation Council, the upper house of
parliament.
But by firing the popular Prime Minister Mr. Yeltsin risks turning
Moscow's usual political trench warfare into all-out conflagration. Analysts
say the short-term political weather forecast is explosive; the long-term
could be disastrous.
"This is all because Yeltsin must remain the almighty number one in
Russia, and cannot share power or prestige with anyone," says Mr. Fyodorov.
"He would rather throw the country into permanent political crisis
than back down. In this way he will ensure there will never be a
well-prepared successor, and so Russia is doomed to a messy and
unpredictable transition of power when Yeltsin finally goes". END END END

******

#12
ANALYSIS-Yeltsin deals blow to Russia economy, IMF
By Patrick Lannin

MOSCOW, May 12 (Reuters) - President Boris Yeltsin's sacking of Prime 
Minister Yevgeny Primakov has plunged the country's crisis-ridden economy 
into fresh uncertainty and puts new IMF and World Bank funds into doubt, 
analysts said on Wednesday. 

They said Yeltsin was playing a dangerous political game that had upset the 
delicate balance between government and parliament which had brought a 
measure of economic stability to a country reeling from an August 1998 
financial crisis. 

"It has basically just thrown the whole economic and political situation into 
confusion," said Roland Nash, an economist at finance house MFK Renaissance. 

Yeltsin's sacking of Primakov and appointment of ally Sergei Stepashin came 
after months of rumoured tensions between the two sending shares and the 
rouble sliding. 

In the longer-term, the economic outlook is inextricably linked with a 
complicated web of domestic politics that involves attempts by the 
Communist-dominated State Duma lower house of parliament to impeach Yeltsin. 

"It seems to me that politics is taking precedence over economics," said the 
head of one Western financial organisation. 

Yeltsin later said on television Primakov's government had relied too much on 
IMF support to solve Russia's economic ills. 

"One has the feeling that the government's activity on the economy came down 
simply to negotiations with the International Monetary Fund, as if curing 
Russia's economy depended solely on the handing out of Western loans," he 
said. 

Economists said any talk of the economic policy Stepashin would follow was on 
hold until he was actually confirmed in office by the Duma, something that 
was very problematic. 

Senior Duma deputies said Primakov's sacking had thrown in doubt economic 
policies and prospects for approval of legislation called for by the 
International Monetary Fund as a condition for lending Russia $4.5 billion 
over 18 months. 

"The new laws will have to be confirmed by the new government. That is a key 
question of economic policy and we have to know the opinion of the new 
cabinet," said Alexander Zhukov, head of the Duma's budget committee. 

"What laws can we talk about now? The Duma is paralysed," said Sergei 
Ivanenko, deputy head of the liberal Yabloko Party. 

"I think that while the government does not confirm these laws we have no 
right to look at them," Nikolai Ryzhkov, head of the leftist People's Power 
movement, said. 

Primakov had enjoyed unprecedented support in the Duma as he and his 
Communist First Deputy Prime Minister Yuri Maslyukov followed what they 
called socially oriented market reforms. 

But the Duma, already bitterly opposed to Yeltsin, was on the verge of 
debating his impeachment and analysts said Yeltsin's latest move was bound to 
ratchet the political tension to new levels. 

The timing of this could not be worse as Primakov's government had just 
struck a deal with the IMF and World Bank for new funds, a key part of which 
involved Duma approval for new taxes and banking legislation. 

"It looked like things were coming together between Primakov and the IMF and 
that has been thrown out of the window now," Nash said. 

Critics had said Primakov was just following a policy of economic drift that 
avoided real decisions on structural reforms although the government did 
manage to stabilise the picture after the August crisis. 

Inflation leapt in the wake of the devaluation, reaching a month-on-month 
figure of 38 percent in September, and as the government printed money to 
make good on its promise of paying wages and pensions. 

But the rate of price rises has since stabilised to three percent 
month-on-month in March after 2.8 percent in February. 

The rouble slid some 75 percent after the August events but has stabilised at 
around 24/25 to the dollar and was firming as the central bank clamped down 
on capital flight. 

Other macroeconomic indicators seemed to be going in the government's favour. 
The fall of industrial output, which was 6.6 percent in 1998, rose 
month-on-month in March by 11 percent and 1.4 percent on a year-on-year 
basis. 

*******

#13
ANALYSIS-Yeltsin raises Kosovo, instability risks
By Paul Taylor, Diplomatic Editor

LONDON, May 12 (Reuters) - Russian President Boris Yeltsin has complicated 
the Kosovo crisis and deepened the risks of instability in Russia by abruptly 
sacking Prime Minister Yevgeny Primakov and his government, Western analysts 
say. 

The move, triggering a political crisis with parliament, came just as Moscow 
is engaged in delicate diplomacy to seek a settlement in Kosovo that would 
enable NATO to end its seven-week-old air war against Yugoslavia. 

Yeltsin coupled his firing of the popular premier, a former spymaster with 
long foreign policy experience, with a threat to walk away from the Kosovo 
peace process unless Russian proposals and mediation efforts were taken more 
seriously. 

NATO Secretary-General Javier Solana shrugged off that broadside, saying on a 
brief visit to Albania: "I am sure that whatever the final result of the 
change of government in Russia, the diplomatic process will continue." 

But while Western spokesmen voiced public expectations that Russia would 
remain constructively engaged, the private reaction in Western capitals was 
one of some dismay and foreboding. 

"This certainly won't make the Kosovo diplomacy any easier. It could 
complicate things, if Kosovo becomes an object of competing nationalist 
rhetoric in an aggravated Russian power struggle," one Western Balkans 
policymaker said. 

Anatol Lieven, a Russia expert at the International Institute for Strategic 
Studies, said it could be more difficult now for Moscow to cooperate with the 
West on the Balkans. 

"It could be disastrous from the point of view of Kosovo diplomacy," he said. 
"Now least of all can Yeltsin afford to be seen as a NATO puppet. The whole 
of Russian policymaking will be a shambles." 

Lieven said Yeltsin's third dismissal of a prime minister in little more than 
a year could unleash a constitutional crisis and even a confrontation with 
parliament similar to 1993, when he sent in tanks to eject a recalcitrant 
legislature. 

But it was not clear whether the security forces would act against parliament 
this time. 

Sir Brian Fall, who was British ambassador to Moscow in the mid-1990s, said 
Yeltsin was behaving increasingly erratically, losing credibility at home and 
abroad, and showing "a lack of sensible strategic purpose." 

In what was interpreted as a political move to sideline Primakov, Yeltsin 
appointed rival former prime minister Viktor Chernomyrdin as his Kosovo peace 
envoy three weeks ago. 

Acting Foreign Minister Igor Ivanov, part of the Primakov cabinet dismissed 
on Wednesday, reached agreement with the Group of Seven Western industrial 
powers last week on the broad terms for a political settlement. 

But crucial work must still be done to turn that outline agreement into a 
U.N. Security Council resolution, working out the mandate and composition of 
an international security force for Kosovo and winning Chinese acquiescence 
despite NATO's accidental bombing of China's embassy in Belgrade. 

Western governments were looking to Russian cooperation on all of those 
issues. 

But beyond the immediate concerns over Kosovo, international concern focuses 
on the political and economic stability of Russia, and its strategic 
consequences. 

U.S. officials have long been concerned about the safety of the huge former 
Soviet nuclear arsenal and the potential transfer of nuclear and missile 
technology and expertise to Middle East and Asian adversaries such as Iran 
and North Korea. 

Primakov, a veteran of both the Soviet and Russian governments, was seen in 
the West as having stabilised Russia after the financial crisis last August 
in which the rouble crashed and the government defaulted on its domestic 
debt. 

Western analysts dismissed Yeltsin's official explanation that he had 
dismissed Primakov to promote economic reform. 

"Primakov was was probably the one person who could get the Duma (parliament) 
to enact some of the economic reforms demanded by the International Monetary 
Fund (IMF). There's no chance of that legislation being passed now," said 
Brigitte Granville, an economist at Britain's Royal Institute of 
International Affairs. 

Achie Brown, professor of politics at Oxford University, said Yeltsin had 
done another disservice to efforts to promote a stable democracy in Russia by 
sacking a prime minister who commanded a majority in the Duma. 

Parliament was now more likely to press ahead with a vote to impeach Yeltsin 
out of anger, reject his nominee for premier and open a constitutional crisis 
over whether the president can dissolve the legislature during impeachment 
proceedings. 

"Yeltsin has given a big helping hand to the Communists and nationalists and 
dealt a damaging blow to the development of democracy," he said. 

Brown and Lieven both suggested that Primakov had been ousted partly because 
he had allowed investigations into alleged corruption to proceed against 
members of Yeltsin's family and inner circle, including businessman Boris 
Berezovsky. 

******

#14
Russia investment bets off after sacking -analysts
By Gill Tudor 

LONDON, May 12 (Reuters) - All bets on foreign investment in Russia are off 
following the sacking of Prime Minister Yevgeny Primakov, overseas analysts 
said on Wednesday. 

Russian asset prices reeled across the board after President Boris Yeltsin 
abruptly fired Primakov and replaced him with First Deputy Prime Minister 
Sergei Stepashin, a staunch ally. 

"Foreign investors will be warned yet again about the risks," said Charles 
Blitzer, chief economist, emerging markets at Donaldson, Lufkin & Jenrette in 
London. "This is one more negative." 

Russian markets had been reviving in recent months and some guarded 
confidence was starting to return after the country's financial blowout last 
August, when many foreign investors were badly burned by devaluation and 
domestic debt default. 

Signs of economic improvement under Primakov, a rise in world oil prices, a 
new $4.5 billion funding agreement with the International Monetary Fund and 
promises to honour Eurobond obligations all helped to repair battered 
sentiment. 

The Russian stock market was up 111 percent in dollar terms in the year to 
Tuesday, making it by far the best performer this year in the International 
Finance Corporation's indices. 

"That's all out of the window now," said Tim Ash, eastern Europe economist at 
Westdeutsche Landesbank in London. 

"It's the worst possible thing Yeltsin could do. Primakov has done an 
excellent job in the last six months in stabilising the political and 
economic situation. Now the whole future of the IMF programme is up in the 
air." 

Russian share trading was suspended twice as stocks plunged more than 16 
percent on news of the sacking, and the rouble fell around two percent to 
24.76 against the dollar. 

Russian debt prices also plummeted, with the global bond due 2018 dropping 
6-1/2 cents on the dollar to 37 cents bid. 

Analysts said Primakov's steady hand and the IMF deal were central to 
investor confidence, and few players would be prepared to buy Russia in the 
current confused circumstances. 

"It is another case of sell now, talk later," analysts at Deutsche Morgan 
Grenfell said in a note to clients. "Much of the huge rally over the past 
eight months has been due to the political stability created by Primakov and 
this has now gone." 

Russia's assurances that it will meet its Eurobond payments rest to a very 
large extent on funds from the IMF, which in turn depend on the prime 
minister persuading parliament to pass several laws boosting revenues. 

The IMF credit would also save Russia from defaulting to the Fund itself and 
open the door to sorely needed debt restructuring talks with other foreign 
creditors. 

Parliament supported the Primakov government, but analysts doubt Stepashin 
will be able to wield the same clout. 

World Bank chief James Wolfensohn said the bank's $3.0 billion loan to Russia 
was on hold following Primakov's ousting. 

"Until there is a new government, there is nothing we can do," he told CNN. 

Investors are taking a similar view. 

"What happens to people like the finance minister and deputy finance minister 
who've been reassuring the markets for the last couple of months that they 
will meet their Eurobond obligations?" Ash at WestLB said. "Who knows any 
more?" 

*******